3 Stocks Pushing The Specialty Retail Industry Lower

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

The Specialty Retail industry as a whole was unchanged today versus the S&P 500, which was unchanged. Laggards within the Specialty Retail industry included West Marine ( WMAR), down 1.5%, Odyssey Marine Exploration ( OMEX), down 7.1%, CSS Industries ( CSS), down 1.8%, Zagg ( ZAGG), down 2.7% and Titan Machinery ( TITN), down 4.0%.

TheStreet Ratings Group would like to highlight 3 stocks that pushed the industry lower today:

CSS Industries ( CSS) is one of the companies that pushed the Specialty Retail industry lower today. CSS Industries was down $0.54 (1.8%) to $29.10 on heavy volume. Throughout the day, 41,697 shares of CSS Industries exchanged hands as compared to its average daily volume of 22,700 shares. The stock ranged in price between $28.68-$29.99 after having opened the day at $29.73 as compared to the previous trading day's close of $29.64.

CSS Industries, Inc., a consumer products company, is engaged in the design, manufacture, procurement, distribution, and sale of various occasion and seasonal social expression products primarily to mass market retailers primarily in the United States and Canada. CSS Industries has a market cap of $271.5 million and is part of the services sector. Shares are up 3.4% year-to-date as of the close of trading on Wednesday.

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TheStreet Ratings rates CSS Industries as a buy. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures, attractive valuation levels, expanding profit margins, good cash flow from operations and increase in stock price during the past year. We feel these strengths outweigh the fact that the company has had somewhat disappointing return on equity.

Highlights from TheStreet Ratings analysis on CSS go as follows:

  • CSS has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. Along with this, the company maintains a quick ratio of 2.90, which clearly demonstrates the ability to cover short-term cash needs.
  • 35.25% is the gross profit margin for CSS INDUSTRIES INC which we consider to be strong. It has increased from the same quarter the previous year. Along with this, the net profit margin of 9.28% is above that of the industry average.
  • Net operating cash flow has increased to -$18.34 million or 19.65% when compared to the same quarter last year. In addition, CSS INDUSTRIES INC has also vastly surpassed the industry average cash flow growth rate of -36.60%.
  • Compared to where it was 12 months ago, the stock is up, but it has so far lagged the appreciation in the S&P 500. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.

You can view the full analysis from the report here: CSS Industries Ratings Report

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At the close, Odyssey Marine Exploration ( OMEX) was down $0.09 (7.1%) to $1.17 on average volume. Throughout the day, 330,000 shares of Odyssey Marine Exploration exchanged hands as compared to its average daily volume of 433,600 shares. The stock ranged in price between $1.14-$1.36 after having opened the day at $1.21 as compared to the previous trading day's close of $1.26.

Odyssey Marine Exploration, Inc., together with its subsidiaries, is engaged in the archaeologically sensitive exploration and recovery of deep-ocean shipwrecks worldwide. Odyssey Marine Exploration has a market cap of $110.9 million and is part of the services sector. Shares are down 37.6% year-to-date as of the close of trading on Wednesday. Currently there are 2 analysts who rate Odyssey Marine Exploration a buy, no analysts rate it a sell, and none rate it a hold.

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TheStreet Ratings rates Odyssey Marine Exploration as a sell. The company's weaknesses can be seen in multiple areas, such as its generally high debt management risk and generally disappointing historical performance in the stock itself.

Highlights from TheStreet Ratings analysis on OMEX go as follows:

  • Currently the debt-to-equity ratio of 1.88 is quite high overall and when compared to the industry average, suggesting that the current management of debt levels should be re-evaluated. To add to this, OMEX has a quick ratio of 0.58, this demonstrates the lack of ability of the company to cover short-term liquidity needs.
  • OMEX's stock share price has done very poorly compared to where it was a year ago: Despite any rallies, the net result is that it is down by 46.55%, which is also worse that the performance of the S&P 500 Index. Investors have so far failed to pay much attention to the earnings improvements the company has managed to achieve over the last quarter. Naturally, the overall market trend is bound to be a significant factor. However, in one sense, the stock's sharp decline last year is a positive for future investors, making it cheaper (in proportion to its earnings over the past year) than most other stocks in its industry. But due to other concerns, we feel the stock is still not a good buy right now.
  • ODYSSEY MARINE EXPLORATION reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. However, we anticipate underperformance relative to this pattern in the coming year. During the past fiscal year, ODYSSEY MARINE EXPLORATION continued to lose money by earning -$0.14 versus -$0.25 in the prior year. For the next year, the market is expecting a contraction of 85.7% in earnings (-$0.26 versus -$0.14).
  • Compared to other companies in the Professional Services industry and the overall market, ODYSSEY MARINE EXPLORATION's return on equity significantly trails that of both the industry average and the S&P 500.
  • Net operating cash flow has increased to -$6.27 million or 39.30% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 23.07%.

You can view the full analysis from the report here: Odyssey Marine Exploration Ratings Report

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

West Marine ( WMAR) was another company that pushed the Specialty Retail industry lower today. West Marine was down $0.16 (1.5%) to $10.25 on average volume. Throughout the day, 35,507 shares of West Marine exchanged hands as compared to its average daily volume of 45,100 shares. The stock ranged in price between $10.09-$10.55 after having opened the day at $10.42 as compared to the previous trading day's close of $10.41.

West Marine, Inc. operates as a specialty retailer of boating supplies, gear, apparel, footwear, and other water life-related products primarily in the United States. West Marine has a market cap of $247.0 million and is part of the services sector. Shares are down 28.6% year-to-date as of the close of trading on Wednesday. Currently there is 1 analyst who rates West Marine a buy, no analysts rate it a sell, and none rate it a hold.

TheStreet Ratings rates West Marine as a hold. The company's strengths can be seen in multiple areas, such as its revenue growth and largely solid financial position with reasonable debt levels by most measures. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself, feeble growth in the company's earnings per share and deteriorating net income.

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Highlights from TheStreet Ratings analysis on WMAR go as follows:

  • WMAR's revenue growth has slightly outpaced the industry average of 1.5%. Since the same quarter one year prior, revenues slightly increased by 1.6%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • WMAR has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. Although the company had a strong debt-to-equity ratio, its quick ratio of 0.89 is somewhat weak and could be cause for future problems.
  • The gross profit margin for WEST MARINE INC is currently lower than what is desirable, coming in at 32.10%. Regardless of WMAR's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 2.51% trails the industry average.
  • WEST MARINE INC's earnings per share declined by 23.1% in the most recent quarter compared to the same quarter a year ago. Earnings per share have declined over the last two years. We anticipate that this should continue in the coming year. During the past fiscal year, WEST MARINE INC reported lower earnings of $0.29 versus $0.64 in the prior year. For the next year, the market is expecting a contraction of 37.9% in earnings ($0.18 versus $0.29).
  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Specialty Retail industry. The net income has decreased by 24.3% when compared to the same quarter one year ago, dropping from $6.52 million to $4.94 million.

You can view the full analysis from the report here: West Marine Ratings Report

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

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